Your Business

The most successful electrical contractors choose to invest in
assets that enable them to perform efficiently and recruit
employees who have the skills necessary to complete their projects
to the satisfaction of their customers. Every time your company
interviews a prospective employee, you assess the likelihood of a
good fit with colleagues and company culture. Is the same effort
made to determine whether customers’ projects and business
practices are a good fit?

Random prospecting

To build a business, it is tempting to grab every job, and
volume can quickly create burdens on profitability. It is easy to
believe that winning jobs is always about price, and there is no
long-term loyalty in customer relationships. The idea is that every
customer is the same, and they must be retained at all costs. You
don’t educate your competitors—just beat them on every
possible bid, even if you beat yourself up in the process.

Reality check

If a business operates long enough, 80 percent of its profits
probably come from 20 percent of its customers; that growth drains
cash and often compromises profit; and that smart customers prefer
long-term relationships with competent, reliable ECs instead of
low-bid lotto. You may conclude that competing with stupid
competitors is, by definition, stupid—time is more important
than money to most customers, and they will often pay more for
early completion. Customer relationships can resemble dating, and
that doesn’t always work out.

E-Harmony for construction?

How compatible is your company with each of your customers?
Although there are different interests, you are ultimately working
toward a common goal, with an agreed-upon framework for completing
the job on time and on budget, and with an exchange of value that
both parties deem fair. At various points in the project, conflicts
will be resolved, and timing will affect the quality of the
relationship. Sometimes, one of the parties wants to quit. What we
call “doing business” is always about the relationships
between the key people involved in the process of achieving the
goal. If the EC and customer are compatible, the relationship
works.

Determining the profile of the ideal customer is similar to
joining a dating network. You analyze your own needs and wants and
offer the most desirable aspects of yourself to the marketplace.
ECs can analyze the data from past projects to ascertain their
ideal project size, type, location and the specialized skills their
employees have developed. When defining the parameters of your most
successful (profitable) projects, it is easy to see what the
customers have brought to the relationship in each case. Most
likely, these were the projects that ran smoothly from the customer
side with a reasonably fair contract, and you were paid somewhat
promptly.

Risk and reward

Dating is not a random process. Underlying factors always affect
the success of a relationship. When the negatives outweigh the
positives, one person eventually chooses to end the pain. The same
risk and reward process may lead to “breaking up” with
customers who are causing the company more pain than profit. Why
are contractors so reluctant to break up with customers who are
detrimental to their well-being? Sometimes it is loss of revenue,
but often it is a victim mentality—the lurking sense that
being treated poorly is the accepted role of the subcontractor, and
you just cannot do any better. It takes courage to cut these ties,
but it is easier than you think.

Breaking up is easy

Leaving an unproductive relationship can be similar to a
romantic break up. The customer may ask for a reason (the
equivalent of “Why don’t you love me anymore?” or
“What is wrong with me?”). Kindness requires that you
provide the equivalent of the “It’s not you, it’s
me” rationale. When I first tried this, I explained to the
customer (who was continually pounding me to meet prices from
incompetent competitors) that we were just not a good match. Then,
I had some fun. I referred that customer to a competitor who was a
better match. This was win-win-win; I cleared some room on our
schedule for new customers, my so-called competitor thought he had
stolen a customer from me, and the customer got the subcontractor
he deserved.

This method worked remarkably well in aligning our company with
customers who were a good fit. We were willing to be more selective
in pursuing projects, less interested in growing beyond our ideal
revenue level, and ultimately we became more profitable. And we
never confessed the truth—it wasn’t us, it was them.
Breaking up with customers really is that easy.